PPG Ends Strong 2011 with Record Q4

PPG Industries ended a big year with a bang Thursday (Jan. 19), unveiling a record fourth-quarter performance that helped push the company to an overall 11% sales increase for 2011.

Releasing its fourth-quarter and full-year report, the world’s No. 2 paint and coatings company announced $3.5 billion in net fourth-quarter sales for 2011, up 4 percent from Q4 of 2010. Net fourth-quarter income climbed to $216 million, or $1.39 per diluted share.

“PPG achieved record earnings per share each quarter this year by focusing on strong execution in its global businesses, aggressive cost management, and amplified cash deployment,” said Bunch. “In so doing, we delivered the best full-year earnings per share in PPG’s history.”

PPG also announced a quarterly dividend of 57 cents per share on Thursday.

Strong showing by Performance Coatings and Industrial Coatings—which make up about 60 percent of PPG’s sales—was a key piece of the company’s overall performance in 2011.

4th Quarter Report

PPG enjoyed strengthening global demand during the fourth quarter in several end-use sectors, including aerospace, automotive manufacturing and several general industrial markets, said Bunch. That demand was supplemented by PPG market share gains and “aggressive” price increases, he added.

Price hikes will continue in 2012, although raw material prices are stabilizing, to regain formerly spiraling costs that the company previously absorbed, Bunch said.

PPG repurchased 2.7 million shares of stock in the fourth quarter and more than 10 million shares throughout the year. The company also raised its dividend, “marking 40 consecutive years of annual dividend increases,” Bunch noted.

The company ended the year with about $1.5 billion in cash and short-term investments.

Selected Segment Results

Despite the company’s overall performance, not every segment fared well.

Performance Coatings segment sales for the quarter were $1.1 billion, up $34 million over Q4 of 2010, boosted by higher selling prices. However, segment volumes declined 2 percent versus last year.

The aerospace business “continued to deliver excellent growth,” while automotive refinish volumes “fell modestly” due to diminished inventories and the economic uncertainty across Europe.

Industrial Coatings segment sales climbed 7 percent over the fourth quarter of 2010, to $1 billion. Volume grew 4 percent, based on increased global automotive production and growth in several general industrial end-use markets coupled with PPG market share gains. Segment earnings for the quarter were $106 million, an increase of $27 million over 2010’s fourth quarter.

Commodity Chemicals segment sales were $398 million for the quarter, an increase of $22 million over the prior-year quarter. Volumes declined notably, due to significantly lower chlorine industry demand and customer inventory management actions.

Looking ahead, Bunch said he expected the fourth quarter’s uncertainties to persist into the first quarter of 2012, uneven by region and varied by industry.

Europe will remain “the most challenging” region, with “moderate strengthening” expected in the U.S. market, he said.

Growth in emerging markets is expected to remain higher than in developed regions, “but more moderate and erratic” than in the past.

“As a result, we will be very proactive in managing our businesses as we deal with these uncertain market conditions,” Bunch concluded. “We intend to continue to prudently deploy our strong cash position for earnings accretion and rewarding shareholders, and are targeting to end 2012 with a cash balance of less than $1 billion.”